What Is a Corporate Charter

A corporate charter, also known as “articles of incorporation” is the document a business files when it applies to a state to formally incorporate. The charter outlines, in broad strokes, the purpose of the business and how it will be governed. States use these documents to determine whether or not to grant a business corporate status. In most states the charter is filed with the Secretary of State's office.

Corporate Charter Basics

A corporate charter includes the basic information about a business that identifies its scope and purpose and who will run it. This information includes the name of the business, its physical location, board of directors, purpose and method of dissolution. According to the Nolo legal website, in most states the statement of purpose does not have to be too specific. It is usually sufficient to say something like, "The purpose of the corporation is to engage in any lawful activity for which corporations may be incorporated in this state." If the submitted charter is approved by the state, the company becomes incorporated.

Charter vs. Bylaws

A corporation’s bylaws also describe how a business will operate, but provide more detail. For example, in addition to identifying the board of directors, bylaws outline how board members are appointed or elected. Bylaws not only describe the goals and purpose of an organization, but also include limits on an organization’s operations, such as a nonprofit not being involved in lobbying or political advocacy.